Bone homeostasis is maintained by the balanced action of osteoblasts and osteoclasts. Osteoclasts, which are the cells that resorb bone, are derived from hematopoietic precursor cells. Osteoblasts induce precursor cells in the bone marrow to differentiate into osteoclasts by providing stimuli from two essential molecules: M-CSF and TRANCE. We initially cloned TRANCE (also known as RANKL, OPGL, and ODF) as a TNF family member, which is highly expressed in activated T cells. We recently demonstrated that TRANCE provides the costimulation required for proper T cell responses in vivo, thus establishing its pivotal role in the immune system. Recently, others found that TRANCE is also expressed in osteoblasts and works as an osteoclast differentiation factor such that soluble TRANCE, in conjunction with M-CSF, can substitute for stromal cells to induce osteoclast formation in vitro. In addition, we and others found that mice deficient in the TRANCE gene develop severe osteopetrosis due to defects in osteoclast differentiation, thus establishing that TRANCE is indeed an essential factor for osteoclast differentiation in vivo. We propose to extend these molecular genetic studies of the effect of TRANCE on osteoclast differentiation in vivo by pursuing the following specific aims in this revised application: (1) determining whether TRANCE expressed in cells other than osteoblasts, in particular resting T cells, can influence osteoclast differentiation, (2) determining the differential effect of TRANCE expressed in T cells vs. in osteoblasts on osteoclast differentiation, and (3) determining the potential mechanisms governing TRANCE-induced osteoclast differentiation. The knowledge gained from these studies will provide insights into how different cell types may regulate osteoclast differentiation, and how crosstalk between bone, bone marrow, and the immune system occurs. In addition, the studies will elucidate the potential mechanism of how TRANCE regulates osteoclast differentiation in vivo. These studies will, in turn, help to provide the molecular basis of and potential treatment for various bone lesions associated with abnormal T cell activation or lymphomas as well as for bone destruction associated with various other diseases such as arthritis and osteoporosis.